Abu Dhabi's Mubadala Boosted to $250 Billion in Fund Tie-Up
Abu Dhabi to Create Sovereign Fund With $200 Billion in Assets
(Bloomberg) -- Abu Dhabi is combining two of its investment firms to create a wealth fund with assets of about $250 billion as the oil-rich emirate moves ahead with consolidation of state-controlled companies.
Abu Dhabi Investment Council will become part of Mubadala Investment Co., according to state-run WAM news agency. The council’s incorporation into Mubadala is in line with Abu Dhabi’s efforts to accelerate economic diversification in the United Arab Emirates, said Mohammed Bin Zayed Al Nahyan, Abu Dhabi’s crown prince and chairman of Mubadala.
“Merging the funds make sense,” said Issam Kassabieh, senior financial analyst at Mena Corp. Financial Services in Dubai. “They could be looking to create, among the companies they own or control, bigger players that can compete on a larger scale and become global companies.”
Consolidation among Abu Dhabi institutions has been picking up. Mubadala completed a merger with International Petroleum Investment Co. last year, making it the world’s 14th-largest fund with $125 billion of assets, according to the Sovereign Wealth Fund Institute. Abu Dhabi Investment Council has assets of $123 billion, according to the SWFI.
Abu Dhabi’s two largest banks -- National Bank of Abu Dhabi and First Gulf Bank -- were also merged last year to create First Abu Dhabi Bank. Abu Dhabi Investment Council is the biggest shareholder in the merged bank with a stake of 33 percent worth $11 billion, according to data compiled by Bloomberg. It also holds stakes in Abu Dhabi Commercial Bank and Abu Dhabi National Hotels among other companies.
Mubadala -- created in 2002 -- is part of Abu Dhabi’s effort to diversify its economy by turning oil revenue into profitable investments while also attracting technology and jobs to the emirate. Its investments include Globalfoundries Inc., a California-based maker of semiconductors, a stake in Advanced Micro Devices Inc. and a stake in EMI Music Publishing.
Issa Mohammed Al Suwaidi will remain chief executive officer of Abu Dhabi Investment Council and will report to Mubadala Group CEO and Managing Director Khaldoon Khalifa al Mubarak. Mubadala’s board will assume management responsibility of the council.
"An investment vehicle of such scale will enhance the country’s competitive position," Abu Dhabi’s crown prince said in a tweet.
--With assistance from Arif Sharif Filipe Pacheco and Mahmoud Habboush
To contact the reporters on this story: Matthew Martin in Dubai at mmartin128@bloomberg.net, Nour Al Ali in Dubai at nalali1@bloomberg.net.
To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Shaji Mathew, Claudia Maedler
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